The industrial property market in Brisbane’s southside is undergoing significant shifts driven by high debt costs and limited land supply. Developers face challenges with speculative developments as financing costs rise and market sentiment changes. This has led to a slowdown in the acquisition of vacant land, further tightening the already scarce supply of developable industrial land.

With only a tiny percentage of Brisbane’s industrial-zoned land remaining undeveloped, property investors and landlords can capitalise on the growing demand for industrial properties. As land becomes more scarce, the value of existing properties is likely to rise, making now a critical time for strategic investment. Recent transactions highlight the variance in land prices depending on location, zoning, and development readiness, offering a glimpse into the potential returns for astute investors.

1.      High Debt Costs and Shifting Market Sentiment:

o Developers find it challenging to make speculative developments viable due to increased debt costs and changing market sentiment.

o This has led to a pause in speculative developers' acquisition of vacant land.

2.      Limited Supply of Industrial Land:

o    Only about 11% of Brisbane’s 6,500 hectares of industrial-zoned land remains undeveloped and is accessible with suitable services.

o    Recent transactions are few, typically involving institutional developers with tenant precommitments or those looking to land bank until conditions improve.

3.      Notable Transactions:

o    Several key land transactions are highlighted, demonstrating varying land prices and conditions depending on location, zoning, and development readiness.

  Implications for Landlords and Property Investors:

1. Scarcity of Developable Land:
• With limited new developments and only a small percentage of land remaining undeveloped, the scarcity of industrial land will likely drive up the value of existing properties.
• Landlords owning industrial properties in the area may see increased demand for leasing, leading to potentially higher rental yields.
2. High Debt Costs Affecting Development:
• The pause in speculative developments due to high debt costs could mean less competition in the short term for existing properties.
• For property investors, this might present an opportunity to invest in industrial properties as developers pull back, particularly if they can leverage existing assets without incurring high debt.
3. Opportunities in Land Banking:
• Institutional developers engage in land banking, indicating a long-term view that current high-cost conditions are temporary.
• Property investors with the capital to invest in land banking could benefit from future appreciation when market conditions normalise.
4. Leasing Potential:
• Given the example of the 15 Competition Street transaction, where the property was leased post-sale at a competitive rate, landlords might find similar opportunities to secure tenants at favourable terms, especially in well-located, serviced parcels.
• Investors should focus on properties with high tenant demand, which can ensure stable rental income even in challenging market conditions.
5. Market Stability and Caution:
• The caution exhibited by developers suggests that the market is currently in a state of flux. Landlords and investors should know that while the current environment may suppress immediate development activity, the underlying value of well-positioned industrial land remains strong.
• Investors might consider being selective, focusing on properties with good infrastructure, connectivity, and zoning that align with long-term industrial growth trends.

The current market conditions in Brisbane's southside industrial sector present challenges and opportunities for landlords and property investors. The scarcity of developable land and high debt costs push developers to be cautious, which could benefit those holding existing properties. Land banking and strategic acquisitions in well-serviced areas may yield significant returns when the market stabilises. Investors should watch long-term growth potential and be prepared to act when conditions become more favourable.

Given the current dynamics in Brisbane's southside industrial land market, now is the time to act strategically. If you are a commercial property investor or landlord, take advantage of the opportunity to capitalise on the scarcity of developable land and the increasing demand for well-located industrial properties. Consider exploring land banking options or securing existing assets to leverage future market growth.

Contact us today for a comprehensive property valuation. Our valuation team, Scott and Owen, are ready to provide the insights needed to navigate this evolving market and maximise your investment potential. Act now to ensure you make informed decisions that will enhance your returns in Brisbane’s industrial real estate sector.

We know Valuations. We know Queensland.

• Scott Campbell: 0403 165 355
• Owen Thorn: 0405 415 645

Let’s unlock the true value of your property together.

This Article is for general information only and should not be relied on as advice. You should consider your personal situation and seek advice that is specific to your circumstances before making any decisions based on this information. Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

Liability Limited by a Scheme approved under Professional Standards Legislation